The long and the short of it
Q What is the current government position on pension reform?
A The Government wants to introduce reforms which are fair to workers and pensioners as well as being sustainable for the long-term. The Department for Education and Skills recognises the need to get this right and ministers with responsibility for the public-service schemes have met with union representatives to discuss how best to move forward. Further discussions at a scheme specific level will also take place.
Q Will the Government be sticking
to its plans to raise the normal pension age to 65 for schoolteachers?
A All sides recognise the need for the cost pressures associated with increases in life expectancy to be addressed. All aspects of the pension proposals, including the proposed increase in pension age will, however, be open to fresh discussion and negotiation with unions and employers. At this stage, nothing is ruled in or ruled out.
Q I don't want to be forced to work until I'm 65. Can I be certain that that will not happen?
A Yes, whatever the shape of the ultimate reform package, no teacher will be forced to work to age 65. The department wants to make it much easier in future for teachers to have a choice about how they manage the transition from work to retirement. We want to increase flexibility and support a better work-life balance, particularly in the years leading up to retirement. We are looking at allowing teachers to draw part of their pension while remaining in work in perhaps a less responsible post or by moving to part-time working.
Q But won't I have to work for another five years to achieve the pension I could now get at 60?
A No teacher would have to work five more years to get the same pension as now. A key aspect of the department's proposal is to improve the rate at which pension benefits build up so that full benefits - when compared with the existing arrangements - would be achieved by no later than at age 62.5, not age 65. For existing teachers this would occur at an even earlier age because all of their service up to 2013 is protected under the current arrangements. Some teachers would also want to make additional contributions when in work in return for more pension or to start drawing their benefits earlier, and the department is looking at ways of making this easier and more flexible.
Q Why does the Government want to worsen teachers' pensions?
A It doesn't. But it has to be recognised that as people, including teacher pensioners, are living longer a good occupational pension becomes an even more valuable benefit but more costly to provide. This trend is affecting all pension schemes and the public sector cannot ignore it. Many private-sector employers have responded by withdrawing pensions linked to salary and have reduced their contributions. The Government is committed to the continued provision of a high-quality pension scheme for teachers.
Q But aren't there proposals to worsen the ill-health retirement arrangements?
A Ill-health retirement will remain available to all teachers whose medical condition makes them permanently unfit to teach. But the present arrangements do not differentiate between those who could undertake other forms of employment and those who are unfit for any form of gainful employment. The department's proposal - which it is still discussing with the unions - is that those who are unfit for any form of gainful employment would receive higher benefits than under existing arrangements. Those who are unfit to teach but could undertake other forms of employment would receive benefits based on their actual service; there would be no enhancement, but neither would there be any reduction to take account of the early payment of benefits.
Q Why are you preventing any form of early retirement before the age of 55 and stopping me from receiving compensation if I am made redundant?
A We're not. New Inland Revenue rules will come into effect from 2006 resulting in the minimum retirement age (MRA) at which any occupational pension can be drawn in either public or private schemes rising from 50 to 55, although it will not apply to ill-health retirement benefits. For existing teachers, the increase in MRA will not apply until 2010. However, the existing arrangements for premature retirement and severance are too rigid and we are considering with unions and employers how more appropriate and flexible arrangements could be introduced. But we are committed to retaining both premature retirement and enhanced severance arrangements within the scheme provisions.
Q I became a teacher because of the pensions security. Will these reforms not affect recruitment and retention?
A The department thinks not. Good quality pensions will remain a key part of the reward package and the Government remains firmly committed to this.
The department is modernising the TPS and it will remain generally better than those typically offered in the private sector: the benefits are guaranteed, not dependent on investment returns, and they will still be linked to salaries and fully inflation-proofed.
Q So what is in the pensions proposals for me?
A The department has been looking at a package of changes that would include improvements to benefits and greater choice and flexibility. For example, improving the accrual rate to 60ths, introducing benefits for unmarried partners and paying widow, widower and partner pensions for life could be provided without increasing teachers' contribution payments. The department is also looking at flexible retirement arrangements and how we can offer teachers increased scope and flexibility over the ways in which they can buy additional pension benefits.